Employers need to be aware of the changing world of confidentiality in the workplace and devise and implement new policies, given the increasing rights of access by employees and interviewees to hitherto confidential company files, according to the Institute of Personnel and Development (IPD).

IPD director, Mr Michael McDonnell, says the culture, custom and practice in an organisation used to be for personnel records to be "as confidential as medical records". But employees in recent years have had right of access to computer records and soon they will also be entitled to see paper records.

The EU directive that provides for the extension of workers' rights of access to paper records was due to be adopted by October 24th last year. Each member-state needs to prepare legislation to implement the directive.

It is expected that the Bill to enact the legislation be published in the autumn. Once it is introduced in the Republic, it will immediately apply to new files in organisations but there may be a derogation for existing data for up to seven years.

Already, public servants can use the Freedom of Information Act to access their files. And the 1988 Data Protection Act entitles all workers to access data about themselves held on computer.

The big change will be that the comprehensive files currently kept manually by many organisations will be open to scrutiny. This requires "a major seachange in thinking in organisations because the general rule of thumb would be over the next number of years every employee would have access to their files. And it's bound to happen that employees will exercise that right," says Mr McDonnell.

Companies must develop a new policy about the comments that can be written about an individual and the information on file. It had been the case that a wide range of people would write subjective comments. For example, a supervisor might write an opinion that someone was not trustworthy. "And all those little bits of notes would find their way onto the personnel file. That policy would have to obviously change," Mr McDonnell says.

The other major change is how companies approach recruitment and selection. "Even people who don't get a job would be entitled to challenge the decision and the files would be accessible for those people to look at. If you've got comments such as `has she got children?'. . . that will leave a company vulnerable. So there will have to be considerable training and a policy developed," he says.

Mr McDonnell agrees there is the possibility of individuals taking an action for alleged libel. A company's best protection against this would be to have a clear policy as to what individuals could and could not put in the file.

"If it's a fair and objective comment that people can stand over, there's nothing to stop them doing that, provided it's done in a reasonable kind of way. If you just have a feeling about somebody, you can't write that down. You can't just write down hearsay."

Mr McDonnell is sure there are many companies with files that would leave them vulnerable. Such companies should be looking through their files and shredding anything dubious. "It doesn't matter whether you employ two people or 2,000, you should be looking at your personnel files and saying, `If I had to hand this file over to a third party in the morning, would I be able to stand over everything that's in that file?' And if in your own mind you have doubts about it, then remove that data, even at this stage."

Each company should have an adequate, reasonable and clearly articulated disciplinary procedure, he says. "`And that disciplinary procedure, to be reasonable, requires that data that's put on a file about an individual to their detriment should have a time limit."

For instance, a disciplinary procedure could state that a second verbal warning would be recorded in the file and removed after three months if there's no recurrence. A written warning would be removed after six months and a second written warning removed after a year.

If somebody did something wrong, "is it reasonable if in five or six years time, if there's an internal promotion or something like that, that it's still on their file? And I think a third party looking at it would think it's unreasonable," says Mr McDonnell. Companies must look at reasonable time limits. If somebody has done something wrong and then his or her performance for the following year is exemplary, then why should something be retained?